Archdiocese's Strategy Might Disqualify Abuse Victims

By Annysa Johnson
Milwaukee Journal Sentinel
January 13, 2012

With just weeks to go before a Feb. 1 deadline in its bankruptcy, the Archdiocese of Milwaukee is casting a wide net in search of clergy sex abuse victims who might seek to file claims, publishing ads in state and national newspapers and asking its parishes and schools to spread the word.

At the same time, victims advocates say, the archdiocese is embarking on a legal strategy that could result in the vast majority of the nearly 200 sex abuse claims filed to date being thrown out of court, leaving those victims ineligible for a financial settlement from the church - and perhaps changing the trajectory of the bankruptcy case.

That strategy will be tested Feb. 9, when U.S. Bankruptcy Judge Susan V. Kelley hears arguments on a motion, filed in No vember by the archdiocese under court seal, objecting to three victims' claims for compensation.

Lawyers for victims and a church official declined to identify the cases or the legal reasoning behind the move, citing the court seal.

But Archbishop Jerome Listecki alluded to the likely arguments in a letter to local Catholics the day before the filing, suggesting the church could seek to bar claims that are beyond the civil statute of limitations; those of victims who already signed settlements with the archdiocese; and cases involving perpetrators it does not consider archdiocese employees, such as religious order priests or parish workers.

The church's argument, if successful, could lay the groundwork for dismissing all but a small group of claims, a strategy critics say is inconsistent with one of the church's stated goals in filing bankruptcy: to fairly compensate "all victim-survivors with unresolved claims."

"Without getting into the grounds for objections, it's safe to say the archdiocese considers these test cases," said James Stang, lead attorney for the creditors committee that is composed of sex abuse victims.

"I know they are talking about how much they are reaching out to survivors," he said. "But they have filed objections that, if successful, they will argue should be applicable to a large number of claims."

Archdiocese spokeswoman Julie Wolf reiterated the church's commitment to abuse victims, pointing to its creation of a $300,000 therapy fund, announced by Listecki in the same letter in which he laid out its plans to bar certain claims.

The motion "is not inconsistent with the archbishop's stated goal of fairly compensating victims and continuing essential ministries of the church," Wolf said in an email. The church's lawyers do not comment publicly on the case.

Stang characterized the church's claims strategy as "new territory," saying it was not employed in any of the five other diocesan bankruptcies he's handled.

A dramatic reduction in the number of claims, he said, could render moot much of the work already approved by the court, including a forensic analysis of the church's finances and efforts to persuade its insurers to participate in a settlement offer.

"A lot of what's ahead is contingent on how the judge rules on the claims issue," he said. "If they are successful in knocking out the claims, they simply need less money."

The Archdiocese of Milwaukee filed for Chapter 11 bankruptcy protection in January 2011 as a way to deal with the mounting sex abuse claims against it. The process allows the archdiocese to negotiate a settlement with victims and reorganize its finances in a way that allows it to stay in business.

Deadline for victims

Victims have until Feb. 1 to file claims against the archdiocese, and the church is making a final push to comply with a court-ordered notification plan, buying ads in three languages, in 48 publications around the country, including the Journal Sentinel, Los Angeles Times and National Catholic Reporter, according to Wolf.

To date, more than 190 individuals have filed claims alleging abuse, and all but 12 of those are under court seal in an effort to protect their identities as sex abuse victims.

Of the 12, all of the alleged incidents occurred between 1954 and 1981. Eight involve priests, now dead or laicized, who were long-known as abusers and appear on the archdiocese's list of restricted diocesan priests, including the late Lawrence Murphy, who is believed to have molested as many as 200 deaf boys.

The remaining cases involve an Elm Grove priest suspended from ministry last year after the decades-old allegation was reported to the archdiocese; the late Patrick Umberger, who died last year while a 2010 criminal charge of possessing child pornography was pending against him; and at least five other priests who do not appear on the archdiocese list of known offenders.

Four of the claimants signed prior settlements with the church ranging from $5,000 to $88,000, according to court records.

Two of the known offenders - Siegfried Widera and Franklyn Becker - were the subject of several California lawsuits that the archdiocese settled at a cost of more than $17 million, after which it claimed to be putting its Cousins Center headquarters up for sale to help raise the money.

That raises troubling ironies for victim advocates: The archdiocese now claims it does not own the Cousins Center, so proceeds from its sale should not be considered assets of the bankruptcy. And, if decades-old Widera and Becker cases are thrown out here, the California victims could be compensated while Wisconsin victims might not.

"That's the absurdity of these criminal and civil statutes on child sex abuse," said Peter Isely, Midwest director of SNAP, the Survivors Network of Those Abused by Priests.

Case in point, he says: Two Wisconsin brothers were molested by Widera around the same time, one in Wisconsin, the other during a trip to California. Because of the differences in the states' statutes of limitations, only the brother taken to California was able to sue and was included in the settlement there.

"It all depends on jurisdiction; the other brother had no recourse whatsoever," Isely said.

Realizing a remedy

Though part of the federal court system, bankruptcy law turns on the underlying state statutes that are applicable to the issues in dispute. As a result, Judge Kelley would apply Wisconsin law regarding statutes of limitations, employment and contracts to determine whether to disqualify claims based on the grounds laid out by Listecki.

State law offers little leeway on, for example, the statute of limitations, which currently bars sex abuse lawsuits after a victim turns 35, said bankruptcy law professors Ralph Anzivino at Marquette and Jonathan Lipson at the University of Wisconsin-Madison.

But attorney Jeff Anderson, who represents the three clients whose claims are in dispute, is likely to argue a different standard under fraud - a strategy he found successful in pursuing older cases in Wisconsin's civil courts. Anderson declined to comment for this story.

The church's claims strategy, if its critics are correct, illustrates the ongoing tension in the case between the archdiocese's legal rights under the bankruptcy code to minimize its losses and its self-described moral obligation to reach out to victims.

Though the latter is the priority for victim advocates - and many Catholics - it is not necessarily for the bankruptcy courts, Lipson said.

"The larger question is what's the role of the bankruptcy system in all of this," he said. "It's one thing to use the general courts as a forum for venting or punishment . . . but that's not what bankruptcy is about. It's about trying to come up with a remedy that balances a variety of competing concerns, most of which have to do with money and property."








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